How Can Expensive Daycare Save Us Money?

How Can Expensive Daycare Save Us Money?

For every dollar spent on high-quality childcare, the United States saves $2.50.

We came across this figure in a recent article from TIME Healthland, and it raised two immediate questions:

  1. What is high-quality childcare?
  2. How does it save us money?

Let's address them in that order.

What Is High-Quality Childcare?

High quality childcare, according to TIME, is a situation with a low caretaker-to-child ratio, whether in a daycare facility or in a private home, with developmentally appropriate toys and caretakers attuned to each child's individual developmental needs. A study in the Journal of Developmental Psychology showed that adults who experienced high-quality early childcare as kids had more years of education, were more likely to earn college degrees and to hold a job, put off having children for two more years and were less likely to use public assistance than the control group. In fact, this level of care also benefitted the parents, who were more likely to become involved in their children's school community once their child entered kindergarten.

How Does It Save Us Money?

The FPG Child Development Institute at UNC Chapel Hill tracked adults who were in daycare as young children (at the time low-income and at risk for developmental delays or academic failure) in the 1970s and ran a cost-benefit analysis when the participants turned 21. The researchers found that every dollar spent on high-quality childcare was worth over twice its value in the long run: It led to to fewer delays in school, less need for special education and less need to repeat grades.

Interestingly, the caregivers who made such a difference in these children's lives were from the same communities, and weren't notably educated or atypical. What they were was constant, as there was low job turnover when the caretakers were given good training and benefits.

Our takeaway? High-quality childcare isn't necessarily the most expensive (as this mom realized when she opened her own preschool co-op)--it's the number of children and the attentiveness of the caretakers that makes the difference.

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